Albert Edwards, the "uber bear" of economic predictions, has warned of "global deflation and recession" in his latest notes to clients, predicting that US stocks could lose almost three-quarters of their value.
The notorious analyst for Societe Generale believes that the coming market "carnage is an indirect result of the failure of the [US] Fed's quantitative easing". He argued that investors would "reap the whirlwind" of central bank attempts to support their respective economies with looser monetary policy.
Mr Edwards has made a name for himself as an outspoken bear, frequently forecasting that the global economy and stock markets are in for a terrible time. In his latest missive he declared that recent anguish over the Chinese economy should have come as no surprise to money managers.
"The impossible trilogy of maintaining an independent domestic monetary policy and a semi-fixed exchange rate while loosening capital account restrictions is hitting home," he said. Chinese companies have prepared themselves for a further fall in the yuan, Mr Edwards claimed, putting the country in "a better position to transmit a massive deflationary shock".
Western manufacturing "will choke under this imported deflationary tourniquet", he continued. "When an economy is hurtling towards recession it is almost always the manufacturing sector that takes the less volatile services sector by the hand and leads it into a recessionary underworld."
Continuing his pessimistic analysis, Mr Edwards suggested that stocks would soon fall from their "obscene" levels. As Mr Edwards admits, "most believe a 75pc equity bear market to be impossible", yet he predicts that the S&P 500 gauge of US stocks could fall to 550, from its recent 2,100 peak. His views put him starkly at odds with the Wall Street consensus.
The bear market of 2009 "was not completed", Mr Edwards said, arguing that it would take further economic downturns for equities to come down. "That obviously will be a catastrophe for the economy via the wealth effect and all the Fed's QE hard work will turn to dust," he continued.
Mr Edwards believes that this coming collapse would result in a "trade war not unlike that in the 1930s", mirroring the deflationary bust and trade war of the Great Depression era. "I realise most people think I am talking utter garbage but I'm used to that," he added. His calls do not chime with mainstream economists, who believe that US GDP will rise by 2.6pc this year.
"I believe the Fed and its promiscuous fraternity of central banks have created the conditions for another debacle every bit as large as the 2008 global financial crisis," he concluded.
Mr Edwards' contrarian forecasts come days after Andrew Roberts, an RBS analyst, published a research note warning clients to "sell everything except high quality bonds" on worries that 2016 would be a "cataclysmic year" for investors.
Global disinflation could morph into global deflation this year, Mr Roberts said, as conditions appear "very dangerous for every investor in the world".
Stephen Koukoulas, managing director of Market Economics, has challenged Mr Roberts to a Aus $10,000 (£4,900) bet that his pessimistic forecasts will not come to pass.
Mr Koukoulas said that he had emailed the RBS strategist to lay down the gauntlet. "I think you will be wrong and in the spirit of the market and healthy competition would like to offer you a chance to personally benefit from your forecast," he wrote.
He added: "Please let me know if you are happy to take up the offer. I am willing to put my hard-earned money where my mouth is - I hope you are too."